Coal demand rising, but share of energy market drops

CHARLESTON, W.Va. -- Global demand for coal will continue to rise, but its share of the international energy mix will drop over the next two decades as natural gas and renewable sources surge, according to an International Energy Agency report issued Monday.

Total world energy demand will continue to rise through 2035, and policies to reduce energy-related greenhouse gas emissions are urgently needed to avoid locking in dangerous global warming, the IEA said in its latest "World Energy Outlook" report.

"Taking all new developments and policies into account, the world is still failing to put the global energy system onto a more sustainable path," the report said.

"Energy efficiency is just as important as unconstrained energy supply, and increased action on efficiency can serve as a unifying energy policy that brings multiple benefits," van der Hoeven said.

The IEA report said that energy efficiency "can improve energy security, spur economic growth, and mitigate pollution" but that "current and planned efforts fall well short of tapping into its full economic potential."

In the U.S., IEA cited efforts by the Obama administration to mandate tougher vehicle fuel economy standards as one positive trend in energy efficiency, but said more needs to be done, especially in the buildings and industry sectors of the economy.

The IEA said that fossil fuels are expected to remain dominant in the nation's energy mix. Demand for oil, gas and coal will grow in absolute terms through 2035, but their combined share of energy supply will fall from 81 percent to 75 percent during that period.

IEA said that "an energy renaissance in the United States is redrawing the global energy map," fueled by rising production of oil, shale gas and bio-energy, along with improved efficiency in the transportation sector.

"The United States, which currently imports around 20 percent of its total energy needs, becomes all but self-sufficient in net terms by 2035," the IEA report said.

IEA said that subsidies to fossil fuels "continue to distort energy markets." Fossil fuel subsidiaries grew globally to $523 billion in 2011, nearly 30 percent more than in 2010, the report said. By comparison, government financial support for renewable energy amounted to $88 billion in 2011, the report said.

Still, renewable energy is projected to become the world's largest source of power generation by 2015 and "close in on coal as the primary source by 2035," the IEA report said.

In Southern West Virginia, projections for international coal demand are becoming increasingly important, as coal producers look overseas to make up for decreased demand fueled by cheap natural gas and a variety of other factors.

The IEA report notes that coal "has met nearly half of the rise in global energy demand over the last decade, growing faster even than total renewables.

"Whether coal demand carries on rising strongly or changes course will depend on the strength of policy measures that favor lower-emissions energy sources, the deployment of more efficient coal-burning technologies and, especially important in the longer term, [carbon capture and sequestration]," the IEA report said.

IEA said that policy decisions made in China and India, where coal demand growth is expected to keep rising, "carry the most weight" for the fuel's future.

China's coal demand is expected to peak around 2020, while coal use in India continues to rise until it overtakes the U.S. as the second-largest user of coal by 2025.

"The sensitivity of these trajectories to changes in policy, the development of alternative fuels ... as the timely availability of infrastructure, create much uncertainty for international steam coal markets and prices," the IEA said.

The report warned that two-thirds of the world's "carbon reserves" -- measured in potential carbon dioxide emissions -- are related to coal, 22 percent to oil and 15 percent to natural gas.

No more than one-third of the proven world reserves of fossil fuels can be consumed prior to 2050 if the world is to keep greenhouse-related global warming below 2 degrees Celsius, unless carbon capture and storage is widely deployed.

"These findings underline the importance of [carbon capture and storage] as a key option to mitigate carbon dioxide emissions, but its pace of deployment remains highly uncertain, with only a handful of commercial-scale projects currently in operation," the IEA report said.